What changed in this filing

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Item 1. Financial Statements

2020-11-12 compared with 2020-08-13 · 204 added, 141 removed, 286 unchanged (55% of the section changed)

3 unchanged sentences

(Amounts in thousands, except share and per share amounts)

September 30,

Current assets:

13 unchanged sentences

Total current liabilities

Term loan derivative liability

Operating lease liability - long term portion

3 unchanged sentences

$0.001 par value;

200,000,000 shares authorized at June 30, 2020

200,000,000 shares authorized at September 30, 2020

and December 31, 2019, respectively;

and 18,321,068 and 17,834,570 shares

issued and outstanding at June 30, 2020 and December 31, 2019, respectively.

issued and outstanding at September 30, 2020 and December 31, 2019, respectively.

Preferred stock:

$0.001 par value;

5,000,000 shares authorized at June 30, 2020

5,000,000 shares authorized at September 30, 2020

and December 31, 2019, respectively;

no shares issued or outstanding at

June 30, 2020 or December 31, 2019.

September 30, 2020 or December 31, 2019.

Additional paid-in capital

7 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Operating expenses:

6 unchanged sentences

Interest income

Interest expense

Total other income (expense), net

15 unchanged sentences

Preferred Stock

Balance at March 31, 2020

Stock-based compensation

Issuance of common stock from exercise of stock options

Issuance of common stock from Employee Stock Purchase Plan

Balance at June 30, 2020

Balance at March 31, 2019

Stock-based compensation

Issuance of common stock from exercise of stock options

Dividends accrued on redeemable

convertible preferred stock

Accretion (amortization) of premium (discount) on

issuance of redeemable convertible preferred stock

Accretion of discount on investor rights/obligation

Adjustment for excess (shortfall) of fair value over

liquidation value of redeemable convertible

preferred stock

Accretion of issuance costs on redeemable

convertible preferred stock

Conversion of redeemable convertible preferred stock

to common stock in connection with initial public offering

Issuance of common stock upon completion of initial public

offering, net of underwriting discounts and commissions

and issuance costs

Issuance of common stock upon completion of private

placement, net of private placement agent fees

Issuance of common stock from exercise of stock

Issuance of common stock under the at-the-market sales

agreement, net of commissions and fees

Balance at September 30, 2020

Balance at June 30, 2019

Stock-based compensation

Balance at September 30, 2019

See accompanying notes.

8 unchanged sentences

Stock-based compensation

Issuance of common stock from exercise of stock options

Issuance of common stock from Employee Stock Purchase Plan

Balance at June 30, 2020

Issuance of common stock from exercise of stock

Issuance of common stock from employee stock

purchase plan

Issuance of common stock under the at-the-market sales

agreement, net of commissions and fees

Balance at September 30, 2020

Balance at December 31, 2018

Stock-based compensation

Issuance of common stock from exercise of stock options

Issuance of Series C redeemable convertible

preferred stock, net of issuance costs

Dividends accrued on redeemable convertible preferred stock

Issuance of common stock from exercise of stock

Issuance of Series C redeemable convertible preferred

stock, net of issuance costs

Dividends accrued on redeemable convertible preferred

Accretion (amortization) of premium (discount) on

issuance of redeemable convertible preferred stock

issuance of redeemable convertible preferred

Accretion of discount on investor rights/obligation

Adjustment for excess (shortfall) of fair value over

liquidation value of redeemable convertible preferred stock

Accretion of issuance costs on redeemable

convertible preferred stock

Conversion of redeemable convertible preferred stock

to common stock in connection with initial public offering

Issuance of common stock upon completion of initial public

offering, net of underwriting discounts and commissions

and issuance costs

liquidation value of redeemable convertible

preferred stock

Accretion of issuance costs on redeemable convertible

preferred stock

Conversion of redeemable convertible preferred stock to

common stock in connection with initial public

Issuance of common stock upon completion of initial

public offering, net of underwriting discounts and

commissions and issuance costs

Issuance of common stock upon completion of private

placement, net of private placement agent fees

Balance at June 30, 2019

Balance at September 30, 2019

See accompanying notes.

2 unchanged sentences

(Amounts in thousands)

Six Months Ended

Nine Months Ended

September 30,

Operating activities

1 unchanged sentence

Changes in fair value of obligation for loan success fee

Accretion/accrual of term loan discounts and debt issuance

Stock-based compensation

9 unchanged sentences

Payment of loan success fee

Proceeds from term loan

Financing costs of term loan

Proceeds from at-the-market sales, net commissions and fees

Proceeds from exercises of stock options

4 unchanged sentences

of underwriting commissions and discounts

Payments of offering costs

Proceeds from private placement, net of private placement agent fees

Payments of offering costs

Net cash provided by financing activities

2 unchanged sentences

Cash and cash equivalents at end of period

Supplemental disclosure of cash flow information

Interest paid

Supplemental disclosure of non-cash financing activities

Offering costs included in accounts payable and accrued expenses

Financing costs included in accounts payable and accrued expenses

Accretion on redeemable convertible preferred stock

17 unchanged sentences

Accordingly, all share and per share amounts in the Condensed Consolidated Financial Statements have been retrospectively adjusted, where applicable, to reflect the effect of the reverse stock split and adjustments of the redeemable convertible preferred stock conversion for all periods presented.

On May 9, 2019, the Company completed its initial public offering (“IPO”) and a concurrent private placement in which it issued and sold an aggregate of 7,000,000 shares of common stock at an offering price of $10.00 per share, for net proceeds of $62.1 million, after deducting aggregate underwriting discounts and commissions and private placement agent fees of $4.9 million and other offering expenses of $3.0 million.

The Company’s common stock began trading on The Nasdaq Global Market on May 7, 2019 under the ticker symbol “TRVI”.

Upon the closing of the IPO, the Company’s outstanding redeemable convertible preferred stock, including the accrued dividends thereon, automatically converted into shares of the Company’s common stock.

Upon such conversion of the redeemable convertible preferred stock, the Company reclassified the carrying values of the redeemable convertible preferred stock to common stock and additional paid-in capital.

In June 2020, the Company entered into a sales agreement (the “ATM Sales Agreement”) with SVB Leerink LLC, under which the Company may issue and sell shares of its common stock, from time to time, having an aggregate offering price of up to $12.0 million.

Sales of common stock under the ATM Sales Agreement may be made by any method that is deemed an “at the market” offering as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended.

The Company is not obligated to make any sales of its common stock under the ATM Sales Agreement.

The Company had not sold any common stock pursuant to the ATM Sales Agreement as of June 30, 2020 (See Note 13).

The accompanying financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.

The Company has incurred recurring losses since inception, including net losses attributable to the Company of $ 15.9 million for the six months ended June 30, 2020 and $ 26.1 million for the year ended December 31, 201 9 .

In addition, as of June 30, 2020 , the Company had an accumulated deficit of $ 130.1 million.

Since inception, the Company has financed its operations primarily through private placements of its redeemable convertible preferred stock and convertible notes as well as borrowings under term loan facilities, with proceeds from the Company’s initial public offering (“IPO”) and concurrent private placement completed in May 2019, and with sales of common stock under the Company’s sales agreement with SVB Leerink LLC (the “ATM Sales Agreement”).

The Company has incurred recurring losses since inception, including net losses attributable to the Company of $23.2 million for the nine months ended September 30, 2020 and $26.1 million for the year ended December 31, 2019.

In addition, as of September 30, 2020, the Company had an accumulated deficit of $137.5 million.

The Company expects to continue to generate operating losses for the foreseeable future.

As of August 13 , 20 20 , the issuance date of these Condensed Consolidated Financial Statements, the Company expects that its cash and cash equivalents of $ 44.2 million as of June 30, 2020 , will be sufficient to fund its operating expenses and capital expe nditure requirements through at least 12 months from the date of issuance of these Condensed Consolidated Financial Statements.

As of November 12, 2020 , the issuance date of these Condensed Consolidated Financial Statements, the Company expects that its cash and cash equivalents of $53.3 million as of September 30, 2020, will be sufficient to fund its operating expenses and capital expenditure requirements through at least 12 months from the date of issuance of these Condensed Consolidated Financial Statements.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim Condensed Consolidated Financial Statements for the three and six months ended June 30, 2020 and 2019 included herein, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim information.

The accompanying unaudited interim Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2020 and 2019 included herein, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim information.

Certain information and footnote disclosure typically prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations.

6 unchanged sentences

All amounts presented are in thousands of dollars, except share and per share amounts, unless noted otherwise.

The Company has evaluated events occurring subsequent to June 30, 2020 for potential recognition or disclosure in the Condensed Consolidated Financial Statements and concluded there were no subsequent events that required recognition or disclosure other than those provided.

The Company has evaluated events occurring subsequent to September 30, 2020 for potential recognition or disclosure in the Condensed Consolidated Financial Statements and concluded there were no subsequent events that required recognition or disclosure other than those provided.

Use of Estimates

5 unchanged sentences

Unaudited Interim Financial Information

The accompanying interim Condensed Consolidated Balance Sheet as of June 30, 2020, the Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2020 and 2019, and the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019 are unaudited.

The unaudited interim Condensed Consolidated Financial Statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the Company’s opinion, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statements of its financial position as of June 30, 2020, the results of its operations for the three and six months ended June 30, 2020 and 2019, and its cash flows for the six months ended June 30, 2020 and 2019.

The results for the three and six months ended June 30, 2020 and 2019 are not necessarily indicative of results to be expected for the year ending December 31, 2020, any other interim period, or any future year or period.

The accompanying interim Condensed Consolidated Balance Sheet as of September 30, 2020, the Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2020 and 2019, and the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 are unaudited.

The unaudited interim Condensed Consolidated Financial Statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the Company’s opinion, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statements of its financial position as of September 30, 2020, the results of its operations for the three and nine months ended September 30, 2020 and 2019, and its cash flows for the nine months ended September 30, 2020 and 2019.

The results for the three and nine months ended September 30, 2020 and 2019 are not necessarily indicative of results to be expected for the year ending December 31, 2020, any other interim period, or any future year or period.

Fair Value Measurements

The Company’s financial instruments have consisted of cash and cash equivalents, tax credit and other receivables, accounts payable, accrued expenses and obligation for loan success fee (Note 6).

The Company’s financial instruments have consisted of cash and cash equivalents, tax credit and other receivables, accounts payable, accrued expenses, term loans, term loan derivative liability and obligation for loan success fee (Note 6).

Fair value estimates of these instruments are made at a specific point in time, based on relevant market information.

The carrying amounts of cash and cash equivalents, tax credit and other receivables, accounts payable and accrued expenses are generally considered to be representative of their respective fair values because of the short-term nature of those instruments.

The carrying amount of the term loan approximates its fair value due to its floating market-based interest rate.

The fair value of the term loan derivative liability is estimated utilizing a probability-weighted cash flow approach (Note 6).

Current accounting guidance defines fair value, establishes a framework for measuring fair value in accordance with Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures , and requires certain disclosures about fair value measurements.

4 unchanged sentences

Level 3—Unobservable inputs—includes amounts derived from valuation models where one or more significant inputs are unobservable and require the company to develop relevant assumptions.

There were no fair value financial assets or liabilities as of June 30, 2020.

The following table summarizes the financial liabilities measured at fair value on a recurring basis as of September 30, 2 020 and the basis for that measurement, by level within the fair value hierarchy (Note 6).

There were no such financial liabilities as of December 31, 2019 :

September 30,

Financial liabilities

Term loan derivative liability

The following table represents a roll-forward of the fair value of Level 3 instruments (significant unobservable inputs):

September 30,

Financial liabilities

Beginning balance at January 1, 2019 (1)

Balance at beginning of year (1)

Term loan derivative liability

Unrealized loss on Series C redeemable convertible preferred stock liability

1 unchanged sentence

Net settlements (2)

Ending balance at December 31, 2019

Ending balance

The balance at January 1, 2019 relates to the $460 obligation for the loan success fee and the $1,096 fair value of the Series C redeemable convertible preferred stock liability at the time of the third tranche of the Series C Preferred Stock financing in January 2019.

4 unchanged sentences

Should the planned equity financing no longer be considered probable of being consummated, the deferred offering costs are expensed immediately as a charge to operating expenses.

Deferred offering costs relating to the Company’s entry into the ATM Sales Agreement were $267 as of June 30, 2020.

Deferred offering costs relating to the Company’s ATM Sales Agreement were $291 as of September 30, 2020, excluding $77 which has been recorded as a reduction to stockholders’ equity (deficit) in connection with sales under the agreement.

The Company’s IPO was completed in May 2019 and IPO costs incurred in 2019 were recorded as a reduction to stockholders’ equity (deficit).

2 unchanged sentences

Basic and diluted net loss per common share outstanding is determined by dividing net loss, as adjusted for accretion and accrued dividends on redeemable convertible preferred stock, by the weighted average common shares outstanding during the period.

For all periods presented, outstanding shares of Series A redeemable convertible preferred stock (“Series A Preferred Stock”), shares of Series B redeemable convertible preferred stock (“Series B Preferred Stock”), shares of Series C Preferred Stock, if any, and shares issuable upon exercise of stock options have been excluded from the calculation because their effects would be anti-dilutive.

For all periods presented, outstanding shares of Series A redeemable convertible preferred stock, shares of Series B redeemable convertible preferred stock, shares of Series C Preferred Stock, if any, and shares issuable upon exercise of stock options have been excluded from the calculation because their effects would be anti-dilutive.

Therefore, the weighted average common shares used to calculate both basic and diluted net loss per share are the same for each of the periods presented.

Recently Adopted Accounting Pronouncements

There have been no new accounting pronouncements adopted during the six months ended June 30, 2020.

There have been no new accounting pronouncements adopted during the nine months ended September 30, 2020.

Recently Issued Accounting Pronouncements

There have been no new accounting pronouncements during the six months ended June 30, 2020, as compared to the recent accounting pronouncements described in Note 2 to the Company’s audited consolidated financial statements for the year ended December 31, 2019 included in the Annual Report on Form 10-K, which could be expected to materially impact the Company’s unaudited Condensed Consolidated Financial Statements.

There have been no new accounting pronouncements during the nine months ended September 30, 2020, as compared to the recent accounting pronouncements described in Note 2 to the Company’s audited consolidated financial statements for the year ended December 31, 2019 included in the Annual Report on Form 10-K, which could be expected to materially impact the Company’s unaudited Condensed Consolidated Financial Statements.

Prepaid Expenses

Prepaid expenses consist of the following:

September 30,

Prepaid R&D payments

3 unchanged sentences

The lease requires monthly payments ranging from approximately $10 to $11 through February 1, 2023 and provides for two designated months of free rent.

The Company has the option to terminate the lease after 36 months by providing six months notice along with a payment to the landlord in an amount representing the unamortized cost of tenant improvements plus the unamortized broker’s commission, both of which had been paid by the landlord, and as defined in the agreement.

Under ASC 842, the Company determines if an arrangement is a lease at its inception.

5 unchanged sentences

As the Company’s leases do not provide an implicit rate within the lease, the Company uses its incremental borrowing rate, which is updated periodically, based on information available at the commencement date of the lease to determine the present value of the lease payments.

The incremental borrowing rate used on existing leases as of June 30, 2020 was 13.0%.

The incremental borrowing rate used on existing leases as of September 30, 2020 was 13.0%.

The right-of-use asset also includes any lease payments related to initial direct costs and prepayments, and excludes lease incentives.

Lease expense is recognized on a straight-line basis over the lease term.

The Company had no new leases during the six months ended June 30, 2020.

The Company’s operating leases consist of real estate and equipment , and have remaining terms ranging from approximately 6 months to 3 years.

The Company had no new leases during the nine months ended September 30, 2020.

The Company’s operating leases consist of real estate and equipment, and have remaining terms ranging from approximately 3 months to 2 years and 6 months.

The Company has no financing leases.

The following table summarizes the Company’s operating leases as presented on its C ondensed C onsolidated B alance S heet :

The following table summarizes the Company’s operating leases as presented on its Condensed Consolidated Balance Sheet:

September 30,

Operating lease right-of-use asset

2 unchanged sentences

Total operating lease liabilities

Future minimum lease payments under the operating leases are as follows as of June 30, 2020:

Future minimum lease payments under the operating leases are as follows as of September 30, 2020 :

September 30,

Total lease payments

1 unchanged sentence

Carrying value of operating lease liabilities

Lease expense under operating leases, including leases of office equipment, was $31 for each of the three-month periods ended June 30, 2020 and 2019, and $62 for each of the six-month periods ended June 30, 2020 and 2019.

Lease payments made in the three months ended June 30, 2020 and 2019 were $35 and $23, respectively, and $80 and $57 for the six months ended June 30, 2020 and 2019, respectively, with such amounts reflected in the Condensed Consolidated Statement of Cash Flows in operating activities.

Lease expense under operating leases, including leases of office equipment, was $31 for each of the three-month periods ended September 30, 2020 and 2019, and $93 for each of the nine-month periods ended September 30, 2020 and 2019.

Lease payments made in the three months ended September 30, 2020 and 2019 were $23 and $34, respectively, and $103 and $91 for the nine months ended September 30, 2020 and 2019, respectively, with such amounts reflected in the Condensed Consolidated Statement of Cash Flows in operating activities.

Accrued Expenses

Accrued expenses consist of the following:

September 30,

Accrued research projects

Accrued professional fees

Accrued consulting and professional fees

Accrued compensation and benefits

On December 29, 2014, the Company entered into a loan and security agreement (the “Loan Agreement”) with Solar Capital, Ltd.

(“Solar”) and Square 1 Bank (“Square 1”), together (the “Lenders”), which provided $15.0 million in debt financing (the “Term Loan”).

On June 29, 2018, the maturity date of the Loan Agreement, the Company made its final payments of principal and interest due to the Lenders in connection with the Term Loan, as well as $450 in full payment of the final fee and $82 in full payment of the amendment fee.

As a result, there were no outstanding borrowings under the Term Loan as of June 30, 2020 or December 31, 2019, and the Company’s obligations to the Lenders under the Loan Agreement were terminated.

Under the terms of the Loan Agreement, the Company was obligated to pay the Lenders a Success Fee (“Success Fee”) under a Success Fee Agreement (“Success Fee Agreement”) upon the first occurrence of an Exit Event, as defined.

Silicon Valley Bank Term Loan

On August 13, 2020 (the “Effective Date”), the Company entered into a loan and security agreement (the “SVB Loan Agreement”) with Silicon Valley Bank, as lender (“SVB”), pursuant to which SVB provided a term loan to the Company in the original principal amount of $14.0 million (the “SVB Term Loan”).

The Company may use the proceeds from the SVB Term Loan for working capital and general corporate purposes.

The SVB Term Loan bears interest at a floating rate per annum equal to the greater of (A) the prime rate plus 1.00% and (B) 4.25%.

If SVB receives evidence satisfactory to it that the Company has (i) received positive data for the Phase 2b/3 clinical trial of Haduvio sufficient to advance Haduvio into a second Phase 3 clinical trial for prurigo nodularis, and (ii) raised sufficient financing to fund such Phase 3 clinical trial and the Company’s operations, (together, the “Phase 3 Event”), the interest rate under the SVB Term Loan will be adjusted to a floating rate equal to the greater of (A) the prime rate plus 3.00% and (B) 6.25% (see term loan derivative liability discussion below).

On the first business day of each month, the Company will be required to make monthly interest payments and commencing on March 1, 2022, the Company will be required to repay the SVB Term Loan in 24 consecutive installments of principal plus monthly payments of accrued interest.

All outstanding principal and accrued and unpaid interest under the SVB Term Loan and all other outstanding obligations with respect to the SVB Term Loan are due and payable in full on February 1, 2024.

The SVB Loan Agreement permits voluntary prepayment of all, but not less than all, of the SVB Term Loan, subject to a prepayment premium.

Such prepayment premium would be 3.00% of the principal amount of the SVB Term Loan if prepaid prior to the first anniversary of the Effective Date, 2.00% of the principal amount of the SVB Term Loan if prepaid on or after the first anniversary of the Effective Date but prior to the second anniversary of the Effective Date, and 1.00% of the principal amount of the SVB Term Loan if prepaid on or after the second anniversary of the Effective Date but prior to February 1, 2024.

Upon repayment in full of the SVB Term Loan, the Company will be required to pay a final payment fee equal to $1.2 million.

The SVB Term Loan and related obligations under the SVB Loan Agreement are secured by substantially all of the Company’s properties, rights and assets, except for its intellectual property (which is subject to a negative pledge under the SVB Loan Agreement).

If the Company fails to meet certain equity raise requirements under the SVB Loan Agreement, it will be required to deposit unrestricted and unencumbered cash equal to 100% of the principal amount of the SVB Term Loan then outstanding in a cash

collateral account with SVB, which can be used by SVB to prepay the SVB Term Loan at any time.

The SVB Loan Agreement contains customary representation s, warranties, events of default and covenants.

The occurrence and continuation of an event of default could cause interest to be charged at the rate that is otherwise applicable plus 5.00% (unless SVB elects to impose a smaller increase) and would provide SVB with the right to accelerate all obligations under the SVB Loan Agreement , and exercise remedies against the Company and the collateral securing the SVB Term Loan and other obligations under the SVB Loan Agreement, including foreclosure against assets securing the SVB Term Loan and other obligations under the SVB Loan Agreement, including the Company’s cash.

In August 2020, in connection with the SVB Term Loan, the Company paid $56 in financing costs to a third party, which were recorded as deferred charges—loan and will be amortized over the life of the SVB Term Loan using the effective interest method.

Amortization of these deferred financing charges totaled $3 for each of the three and nine-month periods ended September 30, 2020, and is included in interest expense in the Company’s Condensed Consolidated Statements of Operations.

Loan discount—unamortized deferred charges totaled $53 for the nine months ended September 30, 2020, and is included as a direct reduction of the carrying value of the term loan payable on the Company’s Condensed Consolidated Balance Sheet.

In August 2020, in connection with the execution of the SVB Loan Agreement, the Company paid $27 in financing costs to SVB, which were recorded as loan discounts.

These loan discounts are included as a reduction in the balance of the term loan payable on the Company’s Condensed Consolidated Balance Sheet and will be accreted over the life of the SVB Term Loan using the effective interest method.

Accretion of these loan discounts totaled $1 for each of the three and nine-month periods ended September 30, 2020, and is included in interest expense in the Company’s Condensed Consolidated Statements of Operations.

At September 30, 2020 the loan discount-financing costs balance was $26.

In connection with the SVB Loan Agreement, the Company is obligated to pay a final payment fee of $1.2 million upon repayment in full of the SVB Term Loan.

The final payment fee is being accrued over the life of the SVB Term Loan using the effective interest method and is included as an increase in the balance of the term loan payable on the Company’s Condensed Consolidated Balance Sheet.

For the nine months ended September 30, 2020, $64 was accrued for the final payment fee, with such amount included in interest expense in the Company’s Condensed Consolidated Statements of Operations.

Upon the occurrence of the Phase 3 Event, the interest rate on the SVB Term Loan will increase by 2.00% (the “Contingent Interest Rate Increase”) as described above.

The Contingent Interest Rate Increase represents a free-standing financial instrument.

Accordingly, the Company accounted for the Contingent Interest Rate Increase as a derivative under ASC 815, Derivatives and Hedging, and therefore, recorded a term loan derivative liability for the Contingent Interest Rate Increase at its fair value of $187 on the Effective Date of the SVB Loan Agreement.

The Company adjusts this liability to fair value at each reporting date it remains outstanding, with such adjustments recorded as non-cash charges in other income (expense) in the Company’s Condensed Consolidated Statements of Operations.

The change in fair value of the term loan derivative liability as of September 30, 2020 as compared to the fair value at its last measurement date (its date of inception) was not significant.

Upon recording such term loan derivative liability, the Company also recorded an offsetting term loan discount – interest, to be amortized to interest expense in the Company’s Condensed Consolidated Statements of Operations through the SVB Term Loan’s maturity date.

Such amortization was insignificant in the three and nine month periods ended September 30, 2020.

The term loan discount – interest is included as a reduction in the balance of the term loan payable on the Company’s Condensed Consolidated Balance Sheet as of September 30, 2020.

The term loan derivative liability is presented as a non-current liability in the Company’s Condensed Consolidated Balance Sheet as of September 30, 2020.

Fair values of the term loan derivative liability are estimated utilizing a probability-weighted cash flow approach, including variables for the timing of the Phase 3 Event and other probability estimates.

For the fair value calculations of the term loan derivative liability at its inception and at September 30, 2020, significant inputs included the Contingent Interest Rate Increase of 2.00%, a discount rate of 12.0%;

and the SVB Term Loan maturity date of February 1, 2024.

For each of the three and nine-month periods ended September 30, 2020, interest expense under the SVB Term Loan totaled $148, which includes amortization of deferred financing charges, accretion of loan discount-financing costs, accrual of the final payment fee, amortization of the term loan discount-interest and the stated interest on the SVB Term Loan, all as described above.

There was no such interest expense on the SVB Term Loan for either of the three and nine-month periods ended September 30, 2019.

As of September 30, 2020, the Company had outstanding borrowings of $14.0 million under the SVB Term Loan and the term loan

payable balance as presented in the Company’s Condensed Consolidated Balance Sheet as of September 30, 20 20 was comprised as shown below.

There were no outstanding borrowings under the SV B Term Loan as of December 31, 2019.

September 30,

Principal outstanding under term loan

Term loan discount-interest

Term loan discount-unamortized deferred charges

Term loan discount-financing costs, net of accretion

Term loan-final payment fee

Less current portion

Term loan payable, non-current

Interest expense on SVB Term Loan, which is comprised of interest payments, amortization of financing costs and the accrual of the final payment fee, is shown below for the three and nine months ended September 30, 2020.

There was no such expense under the SVB Term Loan for the three and nine months ended September 30, 2019.

Three Months Ended September 30,

Nine Months Ended

September 30,

Interest payments

Amortization of financing costs

Accrual of the final payment fee

Solar Capital Term Loan

On December 29, 2014, the Company entered into a loan and security agreement (the “Solar Loan Agreement”) with Solar Capital, Ltd.

and Square 1 Bank (together, “Solar”), which provided $15.0 million in debt financing (the “Solar Term Loan”).

On June 29, 2018, the maturity date of the Solar Loan Agreement, the Company made its final payments of principal and interest due to Solar in connection with the Solar Term Loan, as well as $450 in full payment of the final fee and $82 in full payment of the amendment fee.

As a result, there were no outstanding borrowings under the Solar Term Loan as of September 30, 2020 or December 31, 2019, and the Company’s obligations to Solar under the Solar Loan Agreement were terminated.

Under the terms of the Solar Loan Agreement, the Company was obligated to pay Solar a Success Fee (“Success Fee”) under a Success Fee Agreement (“Success Fee Agreement”) upon the first occurrence of an Exit Event, as defined.

The Exit Event included, among other things, the completion of a public offering of common stock.

The amount of the Success Fee was equal to 4.5% of th e $15.0 million Term Loan funded.

The amount of the Success Fee was equal to 4.5% of the $15.0 million Solar Term Loan funded.

The Success Fee Agreement was scheduled to terminate on the earlier to occur of (a) payment in full of the Success Fee pursuant to its terms, or (b) December 29, 2021.

The completion of the IPO on May 9, 2019 (see Note 1) triggered the Success Fee payment obligation and the Company made payments to its Lenders totaling $675 in May 2019.

The completion of the IPO on May 9, 2019 (see Note 7) triggered the Success Fee payment obligation and the Company made payments to Solar totaling $675 in May 2019.

Upon such payments, the Success Fee Agreement terminated.

The Success Fee Agreement represented a free-standing financial instrument.

Accordingly, the Company accounted for the Success Fee provision as a derivative under ASC 815, Derivatives and Hedging, and therefore recorded an obligation for the Success Fee at its fair value on the closing date of each advance under the Loan Agreement.

Upon recording such obligations for the Success Fee, the Company also recorded an offsetting loan discount, which was accreted to interest expense in the Company’s Statements of Operations through the Term Loan’s maturity date.

The Company adjusted these liabilities for the Success Fee to fair value at each reporting date they remained outstanding.

As discussed above, the Success Fee was paid in May 2019;

and therefore, the total fair value of the Success Fee liabilities was $0 at each of June 30, 2020 and December 31, 2019.

The Company recorded non-cash charges in the amount of $0 and $163 for the three months ended June 30, 2020 and 2019, respectively, and $0 and $215 for the six months ended June 30, 2020 and 2019, respectively, representing the changes in the fair value of these liabilities since their last measurement date.

The fair values of the obligation for the Success Fee were estimated utilizing a probability-weighted income approach, including variables for the timing of the Exit Event and other probability estimates.

and therefore, the total fair value of the Success Fee liabilities was $0 at each of September 30, 2020 and December 31, 2019.

The Company recorded non-cash charges in the amount of $0 for each of the three months ended September 30, 2020 and 2019, and $0 and $215 for the nine months ended September 30, 2020 and 2019, respectively, representing the changes in the fair value of these liabilities since their last measurement date.

The fair values of the obligation for the Success Fee were estimated utilizing a probability-weighted cash flow approach, including variables for the timing of the Exit Event and other probability estimates.

The non-cash charges are included in other income (expense) in the Company’s Condensed Consolidated Statements of Operations.

As of June 30, 2020 and December 31, 2019, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue 200,000,000 shares of common stock, respectively, with a par value of $0.001 per share.

As of June 30, 2020 and December 31, 2019, the Company had reserved 3,665,800 shares and 2,778,812 shares of common stock, respectively, for the exercise of outstanding stock options and the number of shares of common stock remaining available for future stock-based awards under the Company’s 2012 Stock Incentive Plan, 2019 Stock Incentive Plan and 2019 Employee Stock Purchase Plan, as shown in the table below (Note 8):

Stockholders’ Equity

Redeemable Convertible Preferred Stock

Upon the closing of the IPO, the Company’s outstanding redeemable convertible preferred stock, including the accrued dividends thereon, automatically converted into an aggregate of 10,381,234 shares of the Company’s common stock.

As of September 30, 2020 and December 31, 2019, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue 200,000,000 shares of common stock, respectively, with a par value of $0.001 per share.

As of September 30, 2020 and December 31, 2019, the Company had reserved 3,674,484 shares and 2,778,812 shares of common stock, respectively, for the exercise of outstanding stock options and the number of shares of common stock remaining available for future stock-based awards under the Company’s 2012 Stock Incentive Plan, 2019 Stock Incentive Plan and 2019 Employee Stock Purchase Plan, as shown in the table below:

September 30,

Shares of common stock reserved for future issuance under the 2012 Stock Incentive Plan

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Purchase Plan

Initial Public Offering and Concurrent Private Placement

On May 9, 2019, the Company completed its IPO and a concurrent private placement in which it issued and sold an aggregate of 7,000,000 shares of common stock at an offering price of $10.00 per share, for net proceeds of $62.1 million, after deducting aggregate underwriting discounts and commissions and private placement agent fees of $4.9 million and other offering expenses of $3.0 million.

The Company’s common stock began trading on The Nasdaq Global Market on May 7, 2019 under the ticker symbol “TRVI”.

At-the-Market Offering

In June 2020, the Company entered into the ATM Sales Agreement with SVB Leerink LLC, under which the Company may issue and sell shares of its common stock, from time to time, having an aggregate offering price of up to $12.0 million.

Sales of common stock under the ATM Sales Agreement may be made by any method that is deemed an “at the market” offering as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended.

The Company is not obligated to make any sales of its common stock under the ATM Sales Agreement.

The Company began making sales pursuant to the ATM Sales Agreement in July 2020, and as of September 30, 2020, the Company had issued and sold an aggregate of 466,758 shares of common stock for gross proceeds of $2.5 million, before deducting estimated commissions and fees of $0.2 million.

Stock-Based Awards

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The 2019 Plan is administered by the Company’s board of directors.

As of June 30, 2020, awards may be made under the 2019 Plan for up to such number of shares of the Company’s common stock as is equal to the sum of i) 1,578,947 shares;

As of September 30, 2020, awards may be made under the 2019 Plan for up to such number of shares of the Company’s common stock as is equal to the sum of i) 1,578,947 shares;

plus ii) the number of shares (up to 1,157,894 shares) equal to the number of shares of the Company’s common stock subject to outstanding awards under the Company’s 2012 Stock Incentive Plan (the “2012 Plan”), as amended that expire, terminate or are otherwise cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right;

plus iii) an annual increase to be added on the first day of each fiscal year, beginning with 2020 and continuing through 2029, equal to the least of (a) 2,105,623 shares of common stock, (b) 4% of the number of outstanding shares of the Company’s common stock on such date, and (c) an amount determined by the Company’s board of directors.

The number of shares reserved for issuance under the 2019 Plan increased, pursuant to the terms of the 2019 Plan, by an additional 713,383 shares, equal to 4% of the Company’s then-outstanding Common Stock, effective as of January 1, 2020.

plus iii) an annual increase to be added on the first day of each fiscal year,

beginning with 2020 and continuing through 2029, equal to the least of (a) 2,105,623 shares of common stock, (b) 4% of the number of outstanding s hares of the Company’s common stock on such date, and (c) an amount determined by the Company’s board of directors.

The number of shares reserved for issuance under the 2019 Plan increased, pursuant to the terms of the 2019 Plan, by an additional 713,383 s hares, equal to 4% of the Company’s then-outstanding Common Stock, effective as of January 1, 2020.

The 2012 Plan was adopted by the Company’s board of directors and stockholders.

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25% vesting on the first anniversary date of grant and the balance ratably over the next 36 months or vesting in equal monthly or quarterly installments over four ye ars.

As of June 30, 2020 and December 31, 2019, respectively, options to purchase 1,230,225 shares and 631,234 shares of common stock were granted and outstanding, net of cancelations, under the 2019 Plan.

As of June 30, 2020 and December 31, 2019, respectively, options to purchase 1,028,807 and 1,043,992 shares of common stock were granted and outstanding, net of cancelations, under the 2012 Plan.

As of September 30, 2020 and December 31, 2019, respectively, options to purchase 1,302,133 shares and 631,234 shares of common stock were granted and outstanding, net of cancelations, under the 2019 Plan.

As of September 30, 2020 and December 31, 2019, respectively, options to purchase 1,025,649 and 1,043,992 shares of common stock were granted and outstanding, net of cancelations, under the 2012 Plan.

In April 2019, the Company’s board of directors adopted a resolution effective on May 7, 2019 that no further stock options or other equity-based awards may be granted under the 2012 Plan.

During the six months ended June 30, 2019, stock options to purchase 667,102 shares of the Company’s common stock were granted.

During the six months ended June 30, 2019, stock options were exercised for 14,736 shares of common stock.

During the six months ended June 30, 2019, stock options to purchase 35,745 shares of the Company’s common stock were forfeited.

During the six months ended June 30, 2019, stock options to purchase 5,592 shares of the Company’s common stock expired.

A summary of the Company’s combined stock option activity for the 2019 Plan and the 2012 Plan for the six months ended June 30, 2020 is as follows:

During the nine months ended September 30, 2019, stock options to purchase 674,602 shares of the Company’s common stock were granted.

During the nine months ended September 30, 2019, stock options were exercised for 14,736 shares of common stock.

During the nine months ended September 30, 2019, stock options to purchase 35,745 shares of the Company’s common stock were forfeited.

During the nine months ended September 30, 2019, stock options to purchase 6,359 shares of the Company’s common stock expired.

A summary of the Company’s combined stock option activity for the 2019 Plan and the 2012 Plan for the nine months ended September 30, 2020 is as follows:

(in thousands)

Outstanding as of December 31, 2019

Outstanding as of June 30, 2020

Options exercisable as of June 30, 2020

Options unvested as of June 30, 2020

The following table summarizes the classifications of stock-based compensation expenses for the 2012 Plan and the 2019 Plan recognized in the Condensed Consolidated Statements of Operations:

Three Months Ended

Six Months Ended

Research and development expense

General and administrative expense

Outstanding as of September 30, 2020

Options exercisable as of September 30, 2020

Options unvested as of September 30, 2020

In April 2019, the Company’s board of directors adopted the 2019 Employee Stock Purchase Plan (the “2019 ESPP”), which became effective on May 7, 2019.

The 2019 ESPP is administered by the Company’s board of directors.

During the six months ended June 30, 2020, 1,397 shares of common stock were issued and sold under the 2019 ESPP.

The Company recognized $1 of stock-based compensation expense for the 2019 ESPP during the six months ended June 30, 2020.

As of June 30, 2020 , t he aggregate number of shares of the Company’s common stock that may be issued under the 2019 ESPP is equal to the sum of i) 155,106 shares plus ii) an annual increase to be added on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2020 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2029, equal to the least of (a) 526,315 shares of common stock, (b) 1% of the number of outstanding shares of the Company’s common stock on such date, and (c) an amount determined by the Company’s board of directors .

The aggregate number of shares of the Company’s common stock that may be issued under the 2019 ESPP increased, pursuant to the terms of the 2019 ESPP, by an additional 178,345 shares, equal to 1% of the Company’s then-outstanding common stock, effective as of January 1, 2020.

During the nine months ended September 30, 2020, 1,397 shares of common stock were issued and sold under the 2019 ESPP.

The Company recognized $1 and $2 of stock-based compensation expense for the 2019 ESPP during the three and nine months ended September 30, 2020, respectively.

As of September 30, 2020, the aggregate number of shares of the Company’s common stock that may be issued under the 2019 ESPP is equal to the sum of i) 155,106 shares plus ii) an annual increase to be added on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2020 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2029, equal to the least of (a) 526,315 shares of common stock, (b) 1% of the number of outstanding shares of the

Company’s common stock on such date, and (c) an amount determined by the Company’s board of directors.

The aggregate number of shares of the Company’s common stock that may be issued under the 2019 ESPP increased, pursuant to the terms of the 2019 ESPP, by an addit ional 178,345 shares, equal to 1% of the Company’s then-outstanding common stock, effective as of January 1, 2020.

All of the Company’s employees are eligible to participate in the 2019 ESPP, provided that:

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such person was an employee of the Company on the first day of the applicable offering period under the 2019 ESPP.

During the three and six months ended June 30, 2020 and 2019, the Company maintained a full valuation allowance on deferred tax assets.

The following table summarizes the classifications of stock-based compensation expenses for the 2012 Plan, the 2019 Plan and the 2019 ESPP recognized in the Condensed Consolidated Statements of Operations:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Research and development expense

General and administrative expense

During the three and nine months ended September 30, 2020 and 2019, the Company maintained a full valuation allowance on deferred tax assets.

Therefore, the Company has not recorded a provision for income taxes.

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Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Accretion of redeemable convertible preferred stock

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In periods where there is a net loss, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

The following potential shares of common stock, presented based on shares outstanding as of June 30, 2020 and 2019, were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

Shares as of June 30,

The following potential shares of common stock, presented based on shares outstanding as of September 30, 2020 and 2019, were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

Shares as of September 30,

Outstanding stock options

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The Company has also agreed to pay Rutgers a low single-digit percentage of certain income it receives from sublicensees and to pay tiered low single-digit royalties based on net sales of licensed products by the Company and its affiliates and sublicensees.

The Company’s royalty obligation with respect to each licensed product in each country commences on the date of the first commercial sale of the licensed product in that country following receipt of marketing approval and extends until the later of the date of expiration, unenforceability or invalidation of the last valid claim of any licensed patent or patent applicati on covering the licensed product in the country and 10 years after the first commercial sale of the first licensed product sold anywhere in the world, which period is referred to as the royalty term.

Upon the expiration of the royalty term for a licensed p roduct in a country, the license granted to the Company under the agreement shall become perpetual, fully paid-up, irrevocable and royalty-free in such country.

The Company’s royalty obligation with respect to each licensed product in each country commences on the date of the first commercial sale of the licensed product in that country following receipt of marketin g approval and extends until the later of the date of expiration, unenforceability or invalidation of the last valid claim of any licensed patent or patent application covering the licensed product in the country and 10 years after the first commercial sal e of the first licensed product sold anywhere in the world, which period is referred to as the royalty term.

Upon the expiration of the royalty term for a licensed product in a country, the license granted to the Company under the agreement shall become pe rpetual, fully paid-up, irrevocable and royalty-free in such country.

The royalty is subject to reduction in certain circumstances.

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The Company also has commitments under lease and licensing agreements (Note 4 and Note 10).

Subsequent Events

At-the-Market Sales Agreement

In June 2020, the Company entered into the ATM Sales Agreement, under which the Company may issue and sell shares of its common stock.

The Company began making sales pursuant to the ATM Sales Agreement in July 2020, and as of August 13, 2020, the Company had issued and sold an aggregate of 385,823 shares of common stock for gross proceeds of $2.2 million, before deducting estimated commissions and fees of $0.1 million.

Loan and Security Agreement

On August 13, 2020 (the “Effective Date”), the Company entered into a loan and security agreement (the “SVB Loan Agreement”) with Silicon Valley Bank, as lender (“SVB”), pursuant to which SVB has agreed to provide a term loan to the Company in the original principal amount of $14.0 million (the “SVB Term Loan”).

The Company may use the proceeds from the SVB Term Loan for working capital and general corporate purposes.

The SVB Term Loan bears interest at a floating rate per annum equal to the greater of (A) the prime rate plus 1.00% and (B) 4.25%.

If SVB receives evidence satisfactory to it that the Company has (i) received positive data for the Phase 2b/3 clinical trial of Haduvio sufficient to advance Haduvio into a second Phase 3 clinical trial for prurigo nodularis, and (ii) raised sufficient financing to fund such Phase 3 clinical trial and the Company’s operations, the interest rate under the SVB Term Loan will be adjusted to a floating rate equal to the greater of (A) the prime rate plus 3.00% and (B) 6.25%.

The SVB Loan Agreement permits voluntary prepayment of all, but not less than all, of the SVB Term Loan, subject to a prepayment premium.

Upon repayment in full of the SVB Term Loan, the Company will be required to pay a final payment fee equal to $1.2 million.

The SVB Loan Agreement contains customary representations, warranties, events of default and covenants.

The occurrence and continuation of an event of default could cause interest to be charged at the rate that is otherwise applicable plus 5.00% (unless SVB elects to impose a smaller increase) and would provide SVB with the right to accelerate all obligations under the SVB Loan Agreement and exercise remedies against the Company and the collateral securing the SVB Term Loan and other obligations under the SVB Loan Agreement, including foreclosure against assets securing the SVB Term Loan and other obligations under the SVB Loan Agreement, including the Company’s cash.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements